SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box

[ ] Preliminary Proxy Statement

[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Under Rule 14a-12

Calton, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

Check the appropriate box

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14(a)(6)(i)(4) and
0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:

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5) Total Fee Paid:

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__ Fee paid previously with preliminary materials

__ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount previously paid:____________________________________________________

2) Form, Schedule or Registration Statement No._______________________________

3) Filing party:______________________________________________________________

4) Date Filed:________________________________________________________________

CALTON, INC.
------------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 21, 2003

------------------------------

TO THE SHAREHOLDERS OF CALTON, INC.

The Annual Meeting of the Shareholders of CALTON, INC. (the "Company") will
be held on Wednesday, May 21, 2003 at the corporate offices of Calton, Inc.,
2013 Indian River Boulevard, Vero Beach, Florida at 10:00 a.m., local time, for
the following purposes:

1. To elect two (2) directors.

2. To consider and act upon an amendment to the Calton, Inc. 2000 Equity
Incentive Plan (the "2000 Plan") to increase the number of shares reserved for
issuance under the 2000 Plan from 800,000 to 1,300,000 shares.

3. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Holders of Common Stock of record at the close of business on March 28,
2003 are entitled to notice of and to vote at the meeting.

By Order of the Board of Directors,

MARY H. MAGEE
SECRETARY

Red Bank, New Jersey
March 31, 2003

YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU ARE UNABLE TO DO
SO, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY AND MAIL IT AT ONCE IN THE
ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.

CALTON, INC.

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PROXY STATEMENT

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GENERAL INFORMATION

This Proxy Statement is furnished to the holders of Calton, Inc. (the
"Company" or "Calton") Common Stock, $.05 par value ("Common Stock"), in
connection with the solicitation of proxies for use at the annual meeting of
shareholders to be held on May 21, 2003, and at any adjournment thereof (the
"meeting" or "annual meeting"), pursuant to the accompanying Notice of Annual
Meeting of Shareholders. Holders of Common Stock are referred to herein
collectively as the "shareholders." Forms of proxies for use at the meeting are
also enclosed. The Company anticipates mailing this Proxy Statement to its
shareholders on or about April 7, 2003. The executive offices of the Company are
located at 2013 Indian River Boulevard, Vero Beach, Florida 32960.

Shareholders may revoke the authority granted by their execution of proxies
at any time before the effective exercise of proxies by filing written notice of
such revocation with the secretary of the meeting. Presence at the meeting does
not of itself revoke the proxy; however, a vote cast at the meeting by written
ballot will revoke the proxy. All shares represented by executed and unrevoked
proxies will be voted in accordance with the specifications therein. Proxies
submitted without specification will be voted FOR the election of the nominees
for director named herein and FOR the proposal to amend the 2000 Equity
Incentive Plan (the "2000 Plan") to increase the number of shares reserved for
issuance thereunder. Management is not aware at the date hereof of any matters
to be presented at the meeting other than the election of the directors and the
proposal to amend the 2000 Plan. If any other matter is properly presented, the
persons named in the proxy will vote thereon according to their best judgment.

Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. The cost of preparing, assembling and mailing the
proxy material is to be borne by the Company. It is not anticipated that any
compensation will be paid for soliciting proxies, and the Company does not
intend to employ specially engaged personnel of the Company or other paid
solicitors in the solicitation of proxies. It is contemplated that proxies will
be solicited principally through the mail, but directors, officers and employees
of the Company may, without additional compensation, solicit proxies personally
or by telephone, facsimile transmission or letter.

VOTING SECURITIES

The voting securities entitled to vote at the meeting consist of shares of
Common Stock, with each share entitling its owner to one vote on an equal basis.
On March 28, 2003, the number of outstanding shares of Common Stock was
4,644,208. Only shareholders of record on the books of the Company at the close
of business on March 28, 2003 will be entitled to vote at

the meeting. The holders of a majority of the outstanding shares of Common
Stock, present in person or by proxy, will constitute a quorum at the meeting.
The affirmative vote of a plurality of the shares of Common Stock present in
person or represented by proxy and entitled to vote, is required for the
election of directors. The affirmative vote of a majority of the shares present
in person or represented by proxy and entitled to vote is required for the
amendment of the 2000 Plan. The proxy card provides space for a shareholder to
withhold votes for any nominee for the Board of Directors.

All votes will be tabulated by the inspector of election appointed at the
meeting who will separately tabulate affirmative votes, negative votes,
authority withheld for any nominee for director, abstentions and broker
non-votes. Authority withheld will be counted toward the tabulation of the votes
cast on the election of directors and will have the same effect as a negative
vote. Under New Jersey law, any proxy submitted and containing an abstention or
broker non-vote will not be counted as a vote cast on any matter to which it
relates and, accordingly, will have no effect on the outcome of the vote.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present at the annual meeting.

PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to each person who,
as of March 28, 2003, is known by the Company to be the beneficial owner (as
defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934) of
more than five percent (5%) of the Company's Common Stock. Except as set forth
in the footnotes to the table, the shareholders have sole voting and investment
power over such shares:

Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
Anthony J. Caldarone.......................... 1,725,750 (1) 35.9%
Joyce P. Caldarone............................ 1,725,750 (2) 35.9%
Caxton Associates, LLC........................ 289,159 (3) 6.2%

- --------------------

(2) Includes an aggregate of 1,269,510 shares beneficially owned by Anthony J.
Caldarone, Mrs. Caldarone's husband, as to which shares she disclaims any
beneficial interest.

(3) Includes 170,215 shares owned by Caxton International Limited, 25,096
shares owned by Caxton Equity Growth, LLC and 93,848 shares owned by Caxton
Equity Group (BVI) Ltd. Based on a Schedule 13G filed with the Securities
and Exchange Commission, Caxton Associates, LLC is the trading advisor to
Caxton International Limited and Caxton Equity Growth (BVI), and the
managing member of Caxton Equity Growth LLC and as such, has voting and
dispositive power of the shares identified above. Mr. Bruce

Kovner, by reason of being chairman of Caxton Associates, LLC and the sole
shareholder of Caxton Corporation, the majority owner of Caxton Associates,
LLC may also be deemed to be the beneficial owner of the shares identified
above. Mr. Kurt Feuerman, a Managing Director and Senior Trader of Caxton
Associates, LLC, owns 4,000 shares of the Company's Common Stock. The
address of Caxton Associates LLC, is Princeton Plaza, Building 2, 731
Alexander Road, Princeton, New Jersey 08540.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information, as of March 28, 2003, with
respect to the beneficial ownership (as defined in Rule 13d-3) of the Company's
Common Stock by each director and nominee for director, each of the Named
Officers (as defined in the section captioned "Executive Compensation") who is
currently an officer of the Company and by all directors and executive officers
as a group. Except as set forth in the footnotes to the table, the shareholders
have sole voting and investment power over such shares.

Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----

Anthony J. Caldarone..................................... 1,725,705 (1) 35.9%
Kenneth D. Hill.......................................... 165,550 (2) 3.5
John G. Yates............................................ 122,520 (3) 2.6
Maria F. Caldarone....................................... 89,593 (4) 1.9
Laura A. Camisa.......................................... 79,696 (4) 1.7
J. Ernest Brophy......................................... 52,289 (5) 1.1
Mark N. Fessel........................................... 54,444 (5) 1.2
Frank Cavell Smith, Jr................................... 34,013 (6) (7)
Thomas C. Corley......................................... 18,910 (8) (7)
Robert E. Naughton....................................... 9,000 (9) (7)
All Directors and Executive Officers as
a Group (10 persons)(1),(2),(3),(5),(6), (8) and (9).. 2,352,164 46.5

- ---------------

(1) Includes an aggregate of 456,240 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial interest,
and 159,000 shares subject to Currently Exercisable Stock Options.
(2) Includes 8,000 shares held by Mr. Hill's spouse, as to which shares he
disclaims any beneficial interest, and 140,000 shares subject to Currently
Exercisable Stock Options.
(3) Includes 11,000 shares subject to Currently Exercisable Stock Options.
(4) Includes 6,000 shares subject to Currently Exercisable Stock Options.
(5) Includes 22,000 shares subject to Currently Exercisable Stock Options.
(6) Includes 24,000 shares subject to currently Exercisable Stock Options.
(7) Shares beneficially owned do not exceed 1% of the Company's outstanding
Common Stock.
(8) Includes 16,000 shares subject to Currently Exercisable Stock Options.
(9) Includes 9,000 shares subject to Currently Exercisable Stock Options.

ELECTION OF DIRECTORS

The Company's by-laws provide that the Board of Directors shall consist of
not fewer than three nor more than 15 members. The Board of Directors is divided
into four classes, with each class to hold office for a term of four years and
the term of office of one class to expire each year. The Board of Directors has
fixed the number of directors at seven, two of whom are to be elected at the
2003 Annual Meeting, one whose term expires at the annual meeting in 2004, two
whose terms expire at the annual meeting in 2005 and two whose terms expire at
the annual meeting in 2006.

Mark N. Fessel and John G. Yates are the incumbent directors whose terms
expire at the 2002 annual meeting. Each of Mr. Fessel and Mr. Yates has been
nominated to stand for election at the meeting to hold office until the 2007
annual meeting. It is the intention of the persons named in the accompanying
proxy to vote, unless otherwise instructed, in favor of each of the nominees
identified above. If any nominee should be unable to serve, the proxies will be
voted for the election of a substitute nominee, if any, designated by the Board
of Directors. The Company is not aware of any reason why any nominee, if
elected, would be unable to serve as a director.

Set forth below is certain biographical information with respect to the
nominees for election to the Board and the directors whose terms of office will
continue after the 2003 annual meeting.

NOMINEES FOR ELECTION FOR A FOUR YEAR TERM EXPIRING AT THE 2007 ANNUAL MEETING.

MARK N. FESSEL. Mr. Fessel, age 46, has served as a Director of Calton
since May 1993. Since 1985, Mr. Fessel has owned and operated a real estate
company and has acted as principal in numerous commercial and residential real
estate developments throughout the northeast. Mr. Fessel is a 1981 graduate of
the New York University School of Law and the New York University Undergraduate
School of Business. Prior to forming his own real estate company in 1985, Mr.
Fessel was an associate at the New York based law firm of Weil, Gotshal &
Manges.

JOHN G. YATES. Mr. Yates, age 60, was appointed President and Chief
Operating Officer of the Company in September 2002 and a Director of the Company
in October 2002. He has served as President and Chief Executive Officer of the
Company's wholly owned subsidiary, PrivilegeONE Networks, LLC since May 2001.
For eight years prior to joining the Company, Mr. Yates served as Senior Vice
President and General Manager of American Express, and in that capacity
implemented and managed the American Express Corporate Purchasing Card division.
He was also employed for more than 24 years with General Electric in a variety
of senior management positions.

DIRECTORS CONTINUING IN OFFICE UNTIL THE 2006 ANNUAL MEETING

KENNETH D. HILL. Mr. Hill, age 61, has served as a Director of Calton since
April 1999. From July 1999 through June, 2001 he served as Chief Executive
Officer of the Company's wholly owned subsidiary, eCalton.com, Inc. Since 1975,
he has founded and managed computer related companies, including NASTEC
Corporation, a developer of computer-aided software engineering development
tools, from 1982 until its acquisition in 1987, and Multiple

Technologies Corporation, a consulting and application development company, from
1975 to 1982. From January 1994 through February 1996, he was employed as a
consultant by KDH Enterprises, Inc. From March 1997 through April 1998, Mr. Hill
served as President and Chief Executive Officer of DataTell Solutions, Inc., a
regional systems integration company that filed for federal bankruptcy
protection in May 1998. He served as President and Chief Executive Officer of
National AmeriServe, Inc., an internet business solutions provider, from May
1998 through October 1998, when it merged with iAW, Inc., the predecessor of
eCalton.com, Inc.

J. ERNEST BROPHY. Mr. Brophy, age 78, a self-employed attorney and
Certified Public Accountant specializing in tax consultation to clients engaged
in the construction business, was reappointed as a Director of Calton in
November 1995, having served in such capacity from March 1983 through November
1985 and from April 1986 until through May 1993. From 1992 through March 1996,
Mr. Brophy served as Chief Financial Officer and a director of Hurdy-Gurdy
International, Inc., a company that marketed sorbet products.

DIRECTORS CONTINUING IN OFFICE UNTIL THE 2005 ANNUAL MEETING

ANTHONY J. CALDARONE. Mr. Caldarone, age 65, has served as Chairman and
Chief Executive Officer of the Company since November 1995. From November 1995
through August 2002, Mr. Caldarone also served as President of the Company. He
served as director of the Company from June 1993 through October 1995 and as
Chairman, President and Chief Executive Officer from the inception of the
Company in 1981 through June 1993.

ROBERT E. NAUGHTON. Mr. Naughton, age 65, has served as a Director of
Calton since April 1999. He has served as Executive Vice President of the
Company's wholly-owned subsidiary, eCalton.com, Inc., since December 2000. He
served as a consultant to eCalton.com from July 2000 through November 2000. From
1990 until July 2000, he served as President and CEO of SIG, Inc., an
information technology consulting firm specializing in network design and
management, technology transition, business profit improvement, project
management, e-business and staff augmentation. Prior to 1990, Mr. Naughton held
management positions with AGS Information Services, Compuware and SPR
Corporation. He has 25 years of experience in the information technology
industry, including sales, marketing, recruiting and P&L management.

DIRECTOR CONTINUING IN OFFICE UNTIL 2004 ANNUAL MEETING.

FRANK CAVELL SMITH, JR. Mr. Smith, age 58, has served as a Director of
Calton since May 1993. Since 1990, Mr. Smith has been associated with the MEG
Companies as a Senior Consultant responsible for corporate real estate
consulting activities. From 1977 to 1990, Mr. Smith served as a Real Estate
Consultant and Real Estate Development Manager for The Spaulding Co., Inc. Mr.
Smith also is an adjunct faculty member at Boston University and a member of the
Board of Trustees of Shelter, Inc.

MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES

During the fiscal year ended November 30, 2002, the Board of Directors held
four meetings and acted by unanimous written consent on five occasions. During
fiscal 2002, each member of the Company's current Board of Directors attended at
least 75% of the meetings of

the Board of Directors and all of the meetings of the committees on which he
served. See the section captioned "Directors' Compensation" for a discussion of
fees paid by the Company to its directors for their services.

During fiscal 2002, the Board of Directors had two standing committees: the
Audit Committee and the Compensation Committee.

The Audit Committee currently consists of Mr. Brophy, Mr. Fessel and Mr.
Smith. The functions performed by the Audit Committee are, among other things,
to recommend to the Board of Directors the auditors to be engaged as the
Company's independent public accountants, to review the proposed plan and scope
for the annual audit and the results of such audit when completed, to review the
services rendered by the auditors and the fees charged for such services, to
determine the effect, if any, on the independent public accountants'
independence of the performance of any non-audit services and to review the
plan, scope and results of the Company's internal audit operations. During
fiscal 2002, the Audit Committee held three meetings. See "Report of Audit
Committee."

Mr. Fessel and Mr. Smith currently serve as members of the Compensation
Committee. The Compensation Committee reviews and approves compensation for
executive employees of the Company on a periodic basis, subject to approval of
the Board, and administers the Company's Incentive Compensation Plan, the 2000
Plan, the 1996 Equity Incentive Plan (the "1996 Plan"), the Amended and Restated
1993 Non-Qualified Stock Option Plan (the "1993 Plan" and, collectively with the
2000 Plan and the 1996 Plan, the "Option Plans") and the Employee Stock Purchase
Plan. During fiscal 2002, the Compensation Committee held one meeting and acted
by unanimous written consent on one occasion.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years ended November 30, 2002, 2001 and 2000 of the
Chief Executive Officer of the Company in fiscal 2002 and the other executive
officers of the Company who earned salary and bonuses in fiscal 2002 in excess
of $100,000 (collectively, the "Named Officers"):

LONG TERM
ANNUAL COMPENSATION AWARDS COMPENSATION
--------------------------------- ------------
AWARDS
----------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($) OPTIONS ($)(1)
- ------------------------------- ------ ------------------ -------------- ----------------- -----------------

Anthony J. Caldarone 2002 $ 117,433 $ --- (2) $7,594
Chairman & Chief 2001 247,500 --- 175,000(3) 88,500
Executive Officer 2000 275,000 --- 100,000 10,093

John G. Yates 2002 207,270 --- 90,000(2) ---
President (4) 2001 134,000 16,500(5) 55,000(6) ---
2000 --- --- --- ---

Thomas C. Corley 2002 141,162 --- 20,000(2) ---
Senior Vice President, 2001 --- --- --- ---
Treasurer and Chief 2000 --- --- --- ---
Financial Officer(7)

Maria F. Caldarone 2002 120,000 --- 20,000(2) 589
Executive Vice President(8) 2001 --- --- --- ---
2000 --- --- --- ---

Laura A. Camisa 2002 115,000 --- 20,000(2) 580
Senior Vice President(8) 2001 --- --- --- ---
2000 --- --- --- ---

- ---------------

(1) Amounts reported for fiscal 2002 report include cost of premiums paid by
the Company under a program which provides officers of the Company with
additional life insurance (supplementing the coverage available under the
Company's group life insurance plan).
(2) Does not include options granted in January 2002 for services rendered in
fiscal 2001 as follows: Mr. Caldarone - 75,000 shares; Mr. Yates - 25,000
shares; Mr. Corley - 20,000 shares; Ms. Caldarone - 30,000 shares; and Ms.
Camisa - 30,000 shares.
(3) Represents 75,000 shares underlying options granted in January 2002 for
services rendered in fiscal 2001 and 100,000 shares underlying options
which were repriced in fiscal 2001.
(4) Mr. Yates was not an executive officer of the Company in fiscal 2000.
(5) Represents housing allowance.
(6) Represents 25,000 shares underlying options granted in January 2002 for
services rendered in fiscal 2001 and 30,000 shares underlying options
granted in July 2001.
(7) Mr. Corley was not an executive officer of the Company in fiscal 2000 or
2001 and thus compensation information for such years is not presented
above.
(8) Compensation paid to this officer in fiscal years 2001 and 2000 did not
exceed $100,000 and thus information with respect to such years is not
presented above.

DIRECTORS' COMPENSATION

Members of the Board of Directors who are not full time employees of Calton
were each entitled in fiscal 2002 to annual compensation of $10,000 for service
as a director. Calton paid or accrued a total of $42,917 in director fees to
members of the Board of Directors during fiscal year 2002 ($12,000 of which was
paid in the form of Common Stock pursuant to elections permitted under the 1996
Option Plan and 2000 Option Plan). Effective February 26, 2003, directors will
no longer be entitled to cash compensation for services as a director.

Each non-employee director is awarded options to purchase 10,000 shares
of the Company's Common Stock each time such director is elected or re-elected
to the Board of Directors and each time that an annual meeting of shareholders
is held during the term of such director. In order to receive the award, an
incumbent non-employee director must have attended 75% of all Board meetings and
75% of all meetings of Board committees of which the director is a member during
the prior 12 months. Options to purchase an aggregate of 10,000 shares of Common
Stock at an exercise price of $.57 per share (the fair market value of the
Common Stock on the date of grant) were granted to non-employee directors
pursuant to this arrangement in fiscal 2002.

Directors are reimbursed for travel expenses incurred in connection with
attendance at Board and committee meetings.

EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER

Effective November 21, 1995, the Company entered into an Employment
Agreement (the "Employment Agreement") with Anthony J. Caldarone, Chairman,
President and Chief Executive Officer of the Company. Pursuant to the Employment
Agreement, Mr. Caldarone is entitled to a minimum annual salary of $250,000
("Base Compensation") which may be increased by the Board or a committee
thereof. Mr. Caldarone agreed to a reduction in his annual base salary to
$165,000 in October 2001. In January 2002, Mr. Caldarone agreed to a further
reduction of his salary to $100,000 per year. In October 2002, the Board of
Directors extended the term of the Employment Agreement by one year until
November 30, 2003. Mr. Caldarone is entitled to participate in any bonus
compensation or benefit plan or arrangement provided by the Company to its
employees or senior level executives, including the Company's Incentive Plan.
Under the Employment Agreement, Mr. Caldarone may be awarded up to thirty
percent (30%) of the Incentive Plan's designated incentive compensation for any
fiscal year and, subject to such limitation, is entitled to not less than
one-half of the average percentage that all awards to other Eligible
Participants are of the respective Eligible Participants' base salary for the
relevant fiscal year. Mr. Caldarone is entitled to be reimbursed by the Company
for certain automobile expenses and was granted options to purchase 100,000
shares of Common Stock under the 1996 Option Plan pursuant to the Employment
Agreement.

If the Employment Agreement is terminated by reason of Mr. Caldarone's
death, the Company is obliged to reimburse Mr. Caldarone's designated
beneficiaries the cost of COBRA benefits, other than long-term disability
coverage, for a period of 18 months following the date of death. If the
Employment Agreement is terminated by reason of Mr. Caldarone's disability, Mr.
Caldarone will be entitled to receive a lump sum cash payment equal to $275,000

(the "Severance Compensation") from the Company as well as the cost of COBRA
benefits, other than long-term disability, for him and his family for a period
of 18 months following the date of termination, and continue to participate in
any group life insurance or supplemental life insurance program of the Company
then in effect for a period of 18 months following the date of termination
(collectively, the "Severance Benefits"). The Company may terminate the
Employment Agreement for just cause in the event Mr. Caldarone is convicted of a
felony in connection with his duties as an officer of the Company, if the
commission of such felony resulted in a personal financial benefit to Mr.
Caldarone. Upon termination for just cause by the Company, Mr. Caldarone is not
entitled to receive any Severance Compensation or Severance Benefits. If the
Company terminates the Employment Agreement without just cause, Mr. Caldarone is
entitled to the Severance Compensation and Severance Benefits. If the Company
terminates the Employment Agreement by issuing a notice of non-extension, Mr.
Caldarone is entitled to receive Severance Compensation as well as the Severance
Benefits. Mr. Caldarone may terminate the Employment Agreement for just cause
and receive Severance Compensation and Severance Benefits, if (i) the Board
fails to re-elect him as each of Chairman, President and Chief Executive Officer
of the Company, (ii) the Board significantly reduces the nature and scope of his
authorities, powers, duties and functions, (iii) the Company breaches any
material covenant of the Employment Agreement or (iv) the Company consents to
Mr. Caldarone's retirement. If Mr. Caldarone terminates the Employment Agreement
without just cause or by issuing a notice of non-extension, he is not entitled
to the Severance Compensation or Severance Benefits. After the date of
termination of Mr. Caldarone's employment for any of the reasons specified
herein and in the Employment Agreement, Mr. Caldarone will not receive any
further salary payments under the Employment Agreement.

In February 2003, Mr. Caldarone and the Company agreed that effective March
1, 2003, the amount of Severance Compensation payable to Mr. Caldarone under his
Employment Agreement would be reduced by the amount of salary thereafter paid to
Mr. Caldarone as Chairman and Chief Executive Officer of the Company.

OPTION GRANTS

Shown below is further information with respect to grants of stock options
in fiscal 2002 to the Named Officers by the Company which are reflected in the
Summary Compensation Table set forth under the caption "Executive Compensation."

Individual Grants
-------------------------------------------------------------
Potential Realizable Value
Number of Percent of at Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise or for Option Term
Options Employees in Base Price Expiration ---------------------------
Name Granted (#)(1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- -------------- --------------- ------------- ------------ ---------- ------------

Anthony J. Caldarone........ -- -- -- -- -- --
John G. Yates............... 90,000 (2) 58.1% .155 10/30/12 $161,512 $208,376
Thomas C. Corley............ 20,000 (2) 12.9 .155 10/30/12 35,891 46,306
Maria F. Caldarone.......... 20,000 (2) 12.9 .155 10/30/12 35,891 46,306
Laura A. Camisa............. 20,000 (2) 12.9 .155 10/30/12 35,891 46,306

0
- ---------------

(1) Does not include options granted in January 2002 for services rendered in
fiscal 2001. As reported in the Proxy Statement for the Company's 2002
Annual Meeting of Shareholders, in January 2002, Mr. Caldarone and Mr.
Yates were granted options to purchase 75,000 and 25,000 shares,
respectively, of Common Stock at an exercise price of $.61 per share for
services rendered in fiscal 2001. In addition, in January 2002, the other
Named Officers identified above were granted options to purchase the
following number of shares at an exercise price of $.61 per share for
services rendered in fiscal 2001 as follows: Ms. Caldarone - 30,000; Ms.
Camisa - 30,000 and Mr. Corley - 20,000. Each of such options is
exercisable in five equal annual installments commencing on the first
anniversary of the date of grant and expires in January 2012.

(2) These options are exercisable cumulatively in three equal annual
installments commencing on the first anniversary of the date of grant.

OPTION EXERCISES AND FISCAL YEAR-END VALUES

Shown below is information with respect to options exercised by the Named
Officers during fiscal 2002 and the value of unexercised options to purchase the
Company's Common Stock held by the Named Officers at November 30, 2002.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT FY-END (#) OPTIONS AT FY-END ($)(1)
-------------------------- ----------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------

Anthony J. Caldarone.... -- -- 136,000 99,000 (2) (2)
John G. Yates........... -- -- 6,000 139,000 (2) $ 2,250
Thomas C. Corley........ -- -- 12,000 48,000 (2) 500
Maria F. Caldarone...... -- -- -- 50,000 (2) 750
Laura A. Camisa......... -- -- -- 50,000 (2) 750

- ----------

(1) Represents market value of shares covered by in-the-money options on
November 30, 2002. The closing price of the Common Stock on such date was
$.18. Options are in-the-money if market value of shares covered thereby is
greater than the option exercise price.

(2) Exercise price of options exceeded closing price of Common Stock on
November 30, 2002.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table provides information as of November 30, 2002 with
respect to shares of Common Stock that may be issued under the Company's equity
compensation plans:

============================ ============================ ============================ ===============================
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING COMPENSATION PLANS (EXCLUDING
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND SECURITIES REFLECTED IN
WARRANTS AND RIGHTS RIGHTS COLUMN (A))

PLAN CATEGORY (A) (B) (C)

- ---------------------------- ---------------------------- ---------------------------- -------------------------------
Equity compensation plans 731,200 $3.24 60,478 (2)
approved by security
holders(1)
- ---------------------------- ---------------------------- ---------------------------- -------------------------------
Equity compensation plans
not approved by security
holders(3) 120,000 $8.15 -0-
- ---------------------------- ---------------------------- ---------------------------- -------------------------------
TOTAL 851,200 $3.93 60,478
============================ ============================ ============================ ===============================

(1) The Company's 1996 Plan and 2000 Plan provide for the issuance of incentive
awards to officers, directors, employees and consultants in the form of
stock options, stock appreciation rights, restricted stock and deferred
stock, and in lieu of cash compensation. The Company's Employee Stock
Purchase Plan permits the purchase of Common Stock by employees at a
discount to market value through periodic payroll deductions.

(2) Represents 521 shares available for issuance under the 1993 Plan, 1,075
shares available for issuance under the 1996 Plan, 2,622 shares available
for issuance under the 2000 Plan and 56,260 shares available for issuance
under the Employee Stock Purchase Plan. The number of shares available for
issuance under the Employee Stock Purchase Plan is increased on January 1
of each year by an amount equal to the lesser of two percent (2%) of the
total number of shares of Common Stock then outstanding or 75,000 shares.

(3) Represents shares subject to options granted to Kenneth D. Hill, a Director
of the Company pursuant to an employment agreement with the Company which
terminated in July 1999. The options granted to Mr. Hill have an exercise
price of $8.15 per share and expire in July 2009.

CORPORATE PERFORMANCE

Set forth below is a performance graph which compares the percentage change
in the cumulative total shareholder return on the Common Stock of the Company
for the period from December 1, 1997 to November 30, 2002, with the cumulative
total return over the same period on the American Stock Exchange Market Value
Index and the RDG Internet Index over the same period (assuming the investment
of $100 in the Company's Common Stock, the American Stock Exchange Market Value
Index and the RDG Internet Index on December 1, 1997 and that all dividends were
reinvested). The performance graph contained in the Proxy Statement for the
Company's 2002 Annual Meeting of Shareholders included a comparison of the
percentage change in the cumulative total shareholder return to the JP Morgan
H&Q Internet Index. The JP Morgan H&Q Internet Index is no longer published. As
a result, the Company replaced the comparison to such index with a comparison to
the RDG Internet Index. The performance graph set forth below contains a
comparison of the percentage change in cumulative total shareholder return to
the JP Morgan H&Q Internet Index for the period from December 1, 1997 to
November 30, 2001.

CALTON INC NEW

Cumulative Total Return
------------------------------------------------------------
11/97 11/98 11/99 11/00 11/01 11/02

CALTON INC NEW 100.00 242.86 385.83 30.86 23.38 7.86
AMEX MARKET VALUE (U.S. & FOREIGN) 100.00 96.52 122.71 121.70 116.49 104.37
JP MORGAN H & Q INTERNET 100 100.00 207.68 624.95 365.61 207.10 ---
RDG INTERNET 100.00 177.47 413.01 356.02 199.88 145.39

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (the "Compensation
Committee" or the "Committee") has furnished the following report on executive
compensation.

The Compensation Committee is currently comprised of independent,
non-employee directors. It is charged with the responsibility of reviewing and
approving the compensation of the Company's officers and administration of the
Company's Incentive Plan, the Option Plans and severance policy for the
Company's senior executives.

The Committee has determined that the Company's policies for compensation,
including base compensation, incentive compensation and benefits, should be
guided by the marketplace. In recent years, the Committee has determined that
the blend of base salary and incentive compensation offered to the Company's
executive officers should emphasize performance based incentive compensation
over base salary compensation. To accomplish the Committee's compensation
objectives for the Company and to attract, motivate and retain key executives
for the management and long term success of the Company, the Company has
developed compensation programs which provide executive officers a base salary
and the opportunity to

earn additional compensation based on the profits and overall success of the
Company. Compensation programs include salary and incentive plans.

The Company's executive compensation programs have three principal
components: base salary, incentive compensation awards and stock option grants.
Factors considered when determining the base salary for an officer of the
Company include the position of the officer, the amount of responsibility
associated with such position, past performance of such responsibilities,
dedication to the pursuit of achieving individual and Company goals and the
overall results of the Company. The Committee believes that the base salaries of
the Company's executive officers are generally below or similar to the amounts
paid to comparable officers at other companies of the same or similar size and
in the businesses currently and previously conducted by the Company, and,
therefore, incentive compensation in the form of awards under the Incentive Plan
and stock option grants are key components of the total compensation paid or
awarded to officers of the Company. The type and amount of incentive
compensation is a function of the performance of both Company and individual
participants in the particular plan. For example, the Company's Incentive
Compensation Plan (the "Incentive Plan") is a cash based plan directly linked to
the Company's financial performance while the Option Plans provide a method
whereby the officers can share in the long-term growth and success of the
Company. The Committee believes these components collectively provide an
appropriate relationship between an executive's compensation and the Company's
financial performance. The Incentive Plan provides for an incentive compensation
pool equal to 10% of the Company's annual pretax income, subject to certain
adjustments that may be made by the Committee to remove the effect of events or
transactions not in the ordinary course of the Company's operations. Officers
and key operations and senior corporate management employees (the "Eligible
Employees") of the Company and its subsidiaries are eligible for participation
in the Incentive Plan. In addition, a portion of the incentive pool established
under the Incentive Plan may be used for bonuses to full time employees who do
not otherwise have an opportunity to obtain a specified level of commission or
bonuses. The Eligible Employees are determined each year by the Committee based
upon the recommendations of the President and Chief Executive Officer. An
Eligible Employee may not receive a distribution from the incentive compensation
pool for any fiscal year that exceeds 20% of the available incentive
compensation pool or 100% of the Eligible Employee's base salary for the fiscal
year, unless otherwise provided in the Eligible Employee's employment agreement
with the Company. The Compensation Committee ultimately determines the
percentage, if any, to be awarded to an Eligible Employee. No awards were made
under the Incentive Plan for fiscal 2002.

The Compensation Committee reviews the performance of the Chief Executive
Officer and other officers of the Company annually. The Compensation Committee
makes recommendations to the Board with respect to salaries and determines
awards to be made under the Incentive Plan. The Compensation Committee also
determines recipients of, and the number of shares to be covered by, options
granted under the Option Plans to all employees, including officers. Incentive
compensation and stock option grants for executive officers are determined by
evaluating the performance of the individuals reviewed, their contributions to
the performance of the Company, their responsibilities, experience and
potential, their period of service at current salary and compensation practices
for comparable positions at other companies. Financial results, nonfinancial
measures and the Chief Executive Officer's evaluation of other executive
officers are considered.

In November 1995, the Board of Directors appointed Anthony J. Caldarone as
Chairman, President and Chief Executive Officer of the Company. Mr. Caldarone
had previously served in such capacity from the inception of the Company in 1981
through May 1993. In connection with the appointment of Mr. Caldarone as
Chairman, President and Chief Executive Officer, the Board approved an
employment agreement between the Company and Mr. Caldarone which provides for a
minimum base salary of $250,000 per year. In approving the employment agreement
and the compensation payable thereunder, the Board considered the compensation
paid to chief executive officers of similarly situated companies, as well as Mr.
Caldarone's qualifications and prior experience in serving in such capacity. See
"Employment Agreement with Chief Executive Officer" for a more detailed
description of the terms of the employment agreement between the Company and Mr.
Caldarone. In October 2001, Mr. Caldarone proposed a reduction of his annual
base salary to $165,000, which was approved by the Committee. In January 2002,
Mr. Caldarone proposed a further reduction in his annual base salary to
$100,000, which reduction was approved by the Committee. In February 2003, the
Committee, after considering the Company's operating performance and the
progress made by the Company in achieving its strategic plan in fiscal 2002,
determined, as suggested by Mr. Caldarone, that no additional stock options
would be granted to Mr. Caldarone and no increase in Mr. Caldarone's base salary
would be made. In addition, after considering the Company's declining liquidity
position, as well as the reduction in Mr. Caldarone's day to day
responsibilities as a result of the appointment of John G. Yates as President of
the Company in September 2002, the Board of Directors and Mr. Caldarone agreed
in February 2003 that in order to reduce the Company's future obligations,
effective March 1, 2003, the amount of Severance Compensation payable to Mr.
Caldarone under his Employment Agreement would be reduced by the amount of
salary thereafter paid to Mr. Caldarone as Chairman and Chief Executive Officer
of the Company. The Company agreed to a similar arrangement with Mr. Yates, the
Company's President, who is entitled under certain circumstances to a severance
benefit equal to six month's base salary under the Company's severance policy.

In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was
amended to add Section 162(m). Section 162(m) places a limit of $1,000,000 on
the amount of compensation that may be deducted by the Company in any year with
respect to certain of the Company's highest paid executives. Certain
performance-based compensation that has been approved by shareholders is not
subject to the deduction limit. The Company believes that compensation paid to
its officers under all of its compensation plans, except the Incentive Plan,
options to acquire 163,000 shares of Common Stock under the 1993 Option Plan and
options to acquire 120,000 shares of Common Stock granted to Mr. Hill pursuant
to his employment agreement entered into in connection with the Company's
acquisition of iAW, Inc. will qualify as performance based compensation, and
will therefore be exempt from the $1,000,000 deduction limit.

Submitted by:

Mark N. Fessel
Frank Cavell Smith, Jr.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee operates under a written charter adopted by the Board
of Directors. J. Ernest Brophy, Mark N. Fessel (who was appointed to the Audit
Committee in April 2002) and Frank C. Smith, Jr. are the members of the Audit
Committee. Gerald W. Stanley served on the Audit Committee in fiscal 2001 and
until his resignation as a director in March 2002. Each of the members of the
Audit Committee is independent as that term is defined in the Sarbanes-Oxley Act
of 2002 and the American Stock Exchange Listing Standards. The rules of the
American Stock Exchange require that the Audit Committee be comprised of three
independent directors. The Audit Committee oversees the Company's financial
reporting process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed the audited
financial statements in the Company's Annual Report with management.

The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, the matters
required to be discussed by Statement on Auditing Standard No. 61 (Communication
with Audit Committees). In addition, the Audit Committee has discussed with the
independent auditors the auditors' independence from management and the Company,
including the matters in the written disclosures required by the Independence
Standards Board.

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended November 30, 2002
for filing with the Securities and Exchange Commission.

The Audit Committee has also considered whether the independent public
accountants' provision of non-audit services to the Company is compatible with
maintaining their independence. Inasmuch as no such non-audit services were
provided in fiscal 2002, the Audit Committee has determined that the nature and
substance of non-audit services did not impair the status of Aidman, Piser &
Company P.A. as the Company's independent auditors.

Submitted by:

J. Ernest Brophy
Mark N. Fessel
Frank C. Smith, Jr.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Forms 3, 4
and 5 they file.

Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its executive officers, directors and
greater than ten percent shareholders complied with all filing requirements
applicable to them with respect to events or transactions during fiscal 2002,
except that Forms 4 required to be filed by Mr. Yates, Mr. Corley, Ms. Caldarone
and Ms. Camisa in November 2002 in connection with a grant of stock options and
a Form 5 required to be filed by Mr. Hill in January 2003 with respect to an
acquisition of Common Stock under the 2000 Plan in March 2002 and the grant of
stock options in April 2002 were filed late.

PROPOSAL TO AMEND THE 2000 EQUITY INCENTIVE PLAN

On March 27, 2003, the Board of Directors approved, subject to shareholder
approval, an amendment to the 2000 Plan to increase the number of shares of the
Company's Common Stock reserved for issuance thereunder from 800,000 to
1,300,000 shares, an increase of 500,000 shares. The Company is seeking
shareholder approval of the amendment to the 2002 Plan as directed by the Board
of Directors.

The Company's Board approved the 2000 Plan at its meeting on January 27,
2000, subject to the approval by the Company's shareholders. The shareholders of
the Company approved the 2000 Plan at their annual meeting on April 17, 2000,
and the 2000 Plan became effective as of that date. The general nature and
purpose of the 2000 Plan is to enhance the ability of the Company to attract and
retain the services of employees and other persons who have made or are expected
to make significant contributions to the business of the Company and its
subsidiaries by providing such persons with an opportunity to acquire shares of
the Company's Common Stock, or receive other stock-based awards.

A total of 797,378 shares of Common Stock have been issued or are subject
to options granted under the 2000 Plan. Accordingly, at present, there are only
2,622 shares remaining available for stock options and other stock-based awards
to be granted under the 2000 Plan. The Company currently has no other stock
option plans that have more than 3,622 shares available for the grant of stock
options and other stock-based awards to officers, employees and directors. The
Board considers that an increase in the number of shares available for stock
options and other stock-based awards to be granted under the 2000 Plan is
necessary to fulfill the purposes that the Company seeks to achieve with the
2000 Plan. The shareholders will be asked at the annual meeting to adopt and
approve the amendment to increase the number of shares of the Company's Common
Stock reserved for issuance under the 2000 Plan.

Adoption of this proposed amendment requires the affirmative vote of a
majority of the votes cast at the annual meeting by holders of Common Stock.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
2000 EQUITY INCENTIVE PLAN.

SUMMARY OF MATERIAL PROVISIONS OF THE 2000 PLAN

Set forth below is a discussion of the material terms of the 2000 Plan.
Such discussion is qualified by reference to the full text of the 2000 Plan. The
Company will furnish without charge a copy of the 2000 Plan to any shareholder
of the Company upon receipt of a request for a copy of the 2000 Plan. Requests
may be directed to the Company's Secretary at Calton, Inc., 43 W. Front Street,
Suite 15, Red Bank, New Jersey 07701.

GENERAL

The 2000 Plan is administered by the Compensation Committee which is
authorized to grant (i) "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, (ii) nonqualified stock
options, (iii) stock appreciation rights ("SARs"), (iv) restricted stock grants,
(v) deferred stock awards and (vi) other stock based awards to employees of the
Company and its subsidiaries. The Compensation Committee determines (i) the
recipients of awards under the Plan ("Awards"), (ii) the times at which Awards
will be made, (iii) the size and type or types of Awards to be made to each
recipient and (iv) the terms, conditions and limitations applicable to each
Award granted. The Compensation Committee has full and exclusive power to
interpret the 2000 Plan, to adopt rules, regulations and guidelines relating to
the 2000 Plan, to grant waivers of 2000 Plan restrictions and to make all of the
determinations necessary for its administration.

Currently, the aggregate number of shares of Common Stock reserved for
issuance pursuant to Awards granted under the 2000 Plan is 800,000 shares. The
effect of the proposed amendment would be to increase the number of shares
issuable under the 2000 Plan, or grants based or shares reserved for issuance
under the 2000 Plan, by 500,000 shares, to 1,300,000 shares. The maximum number
of shares of Common Stock which may be issued to the Chief Executive Officer
("CEO") of the Company pursuant to all Awards granted to the CEO under the 2000
Plan may not exceed thirty-five percent (35%) of the number of shares of the
Company's Common Stock reserved for issuance under the 2000 Plan. The maximum
number of shares of the Company's Common Stock awarded to any other participant
eligible to receive Awards pursuant to all Awards granted to such participant
under the 2000 Plan may not exceed twenty percent (20%) of the number of shares
of the Company's Common Stock reserved for issuance under the 2000 Plan. The
2000 Plan will terminate on January 27, 2010 unless earlier terminated by the
Board of Directors.

Those eligible to receive Awards under the 2000 Plan (each, a "Participant"
and collectively, the "Participants") are persons in the employ of the Company
or any of its subsidiaries designated by the Committee ("Employees") and other
persons or entities who, in the opinion of the committee, are in a position to
make a significant contribution to the success of the Company or its
subsidiaries, including, without limitation, consultants and agents of and

advisors to the Company or any subsidiary. A "subsidiary" for purposes of the
2000 Plan is a present or future corporation of which the Company owns or
controls, or will own or control, more than 50% of the total combined voting
power of all classes of stock or other equity interests.

AWARDS UNDER THE 2000 PLAN

STOCK OPTIONS. The Compensation Committee may grant either incentive stock
options or non-qualified stock options under the 2000 Plan. Only employees of
the Company may be granted incentive stock options. The exercise price of each
option must be equal to the "fair market value" (as defined below) of the Common
Stock on the date the option is granted to the Participant; provided, however,
that (i) in the Compensation Committee's discretion, the exercise price of a
nonqualified option may be less than the fair market value of the Common Stock
on the date of grant; (ii) with respect to a Participant who owns more than 10%
of the total combined voting power of all classes of stock of the Company, the
exercise price of an incentive stock option granted to such Participant may not
be less than 110% of the fair market value of the Common Stock on the date the
option is granted; and (iii) with respect to any option repriced by the
Compensation Committee, the exercise price must be equal to the fair market
value of the Common Stock on the date such option is repriced unless otherwise
determined by the Compensation Committee. For purposes of the exercise price of
an option, "fair market value" means the average of the high and low sales
prices of the Common Stock as reported on the American Stock Exchange. The term
of each option granted to a Participant pursuant to the 2000 Plan is determined
by the Compensation Committee; provided, however, that in no case may an option
be exercisable more than ten years (five years in the case of an incentive stock
option granted to a ten-percent stockholder) from the date of the grant.

STOCK APPRECIATION RIGHTS. An SAR is an Award entitling the recipient to
receive payment, in cash and/or shares of Common Stock, determined in whole or
in part by reference to appreciation in the value of a share of Common Stock. An
SAR entitles the recipient to receive in cash and/or shares of Common Stock,
with respect to each SAR exercised, the excess of the fair market value of a
share of Common Stock on the date of exercise over the fair market value of a
share of Common Stock on the date the SAR was granted.

The Compensation Committee may grant SARs either alone or in combination
with an underlying stock option. The term of an SAR and the time or times at
which an SAR are exercisable are set by the Compensation Committee; provided,
that an SAR granted in tandem with an option can be exercisable only at such
times and to the extent that the related option is exercisable. An SAR granted
in tandem with an incentive stock option may be exercised only when the market
price of the shares of Common Stock subject to the incentive stock option
exceeds the exercise price of the incentive stock option, and the SAR may be for
no more than 100% of the difference between the exercise price of the underlying
incentive stock option and the fair market value of the Common stock subject to
the underlying incentive stock option at the time the SAR is exercised. At the
option of the Compensation Committee, upon exercise, an SAR may be settled in
cash, Common Stock or a combination of both.

RESTRICTED STOCK GRANTS. The Compensation Committee may grant shares of
Common Stock under a restricted stock grant which sets forth the applicable
restrictions, conditions and

forfeiture provisions which shall be determined by the Compensation Committee
and which can include restrictions on transfer, continuous service with the
Company or any of its subsidiaries, achievement of business objectives, and
individual, subsidiary and Company performance. Shares of Common Stock may be
granted pursuant to a restricted stock grant for no consideration or for any
consideration as determined by the Compensation Committee. Subject to such
restrictions, conditions and forfeiture provisions as may be established by the
Compensation Committee, any Participant receiving an Award of Restricted Stock
will have all the rights of a stockholder of the Company with respect to the
shares of Restricted Stock, including the right to vote the shares and the right
to receive any dividends thereon.

DEFERRED STOCK AWARDS. The Compensation Committee may grant shares of
Common Stock under a deferred stock award, with the delivery of such shares of
Common Stock to take place at such time or times and on such conditions as the
Compensation Committee may specify. At the time any deferred stock award is
granted, the Committee may provide that the Participant will receive an
instrument evidencing the Participant's right to future delivery of Deferred
Stock.

FORMULA AWARDS. Each time an individual who is not an employee of the
Company or a subsidiary of the Company is elected or reelected as a director of
the Company, the director receives non-qualified stock options to acquire 10,000
shares of the Company's Common Stock. Each such option (a "Formula Option") (i)
has a per share exercise price equal to the fair market value of the Common
Stock on the date of such grant, (ii) has a term of five years and (iii) becomes
exercisable on the first anniversary of the date of grant. In order for a
non-employee director to receive a Formula Option, such director must have
attended 75% of all Board meetings and 75% of all meetings of the Board
committee(s) of which the director was a member held during the prior 12 months
while such director was a member of the Board and committee(s).

DIRECTORS FEES. Directors of the Company may elect to receive all or a
portion of their annual retainer fee and meetings fees in the form of the
Company's Common Stock. Shares of Common Stock having an aggregate fair market
value equal to the aggregate amount of Board fees paid in stock will be issued
to a director who elects to receive fees in the form of stock no later than 15
business days following the date of payment of the Board fees by the Company.

FEDERAL INCOME TAX CONSEQUENCES

STOCK OPTIONS. The grant of an incentive stock option or a nonqualified
stock option does not result in income for the grantee or in a deduction for the
Company.

The exercise of a nonqualified stock option results in ordinary income for
the grantee and a business deduction for the Company measured by the difference
between the option's exercise price and the fair market value of the shares of
Common Stock received at the time of exercise. If the Company is required to
withhold income taxes in connection with the exercise of a nonqualified stock
option, the Compensation Committee may, in its discretion, permit such
withholding obligation to be satisfied by the delivery of shares of Common Stock
held by the grantee or to be delivered to the grantee upon exercise of the
option.

The exercise of a qualified incentive stock option does not result in
income for the grantee or in a business deduction for the Company; provided,
that the employee does not dispose of the shares of Common Stock acquired upon
exercise within two years after the date of grant of the option and one year
after the transfer of the shares of Common stock upon exercise, and provided
further that, the employee is employed by the Company or a subsidiary of the
Company from the date of grant until three months before the date of exercise.
If these requirements are met, the employee's basis in the shares of Common
Stock would be the exercise price. Any gain related to the subsequent
disposition of shares of Common Stock will be taxed to the employee as a
long-term capital gain and the Company will not be entitled to any deduction.
The excess of the fair market value of the Common Stock on the date of exercise
over the exercise price is an item of tax preference for the employee,
potentially subject to the alternative minimum tax.

If an employee should dispose of the shares of Common Stock acquired
pursuant to the exercise of an incentive stock option prior to the expiration of
either of the designated holding periods, the employee recognizes ordinary
income and the Company is entitled to a business deduction in an amount equal to
the lesser of the fair market value of the shares of Common Stock on the date of
exercise minus the option exercise price or the amount realized on disposition
of the shares of Common Stock minus the option exercise price. Any gain in
excess of the ordinary income recognized by the employee is taxable as long-term
or short-term capital gain, depending on the holding period. If an option,
intended to be an incentive stock option, does not satisfy all of the
requirements of an incentive stock option pursuant to Section 422 of the Code
when granted, the employee recognizes ordinary income upon exercise of the
option and the Company is entitled to a business deduction in an amount equal to
the fair market value of the shares of Common Stock on the exercise date minus
the option exercise price. Income tax withholding would be required. In the
event an option intended to be an incentive stock option does not qualify as
such when granted or when exercised, the Board of Directors believes that any
related deduction should not be subject to the annual $1 million per capita
limitation on employee remuneration for the Named Officers of the Company
imposed by Section 162(m) of the Code. The Board of Directors believes that the
income recognized by an employee or other participant upon the exercise of an
option granted under the 2000 Plan should be qualified performance-based
compensation and, therefore, an exception to the limitations imposed on the
Company by Section 162(m) of the Code with respect to the deductibility of a
Named Officer's compensation during a particular calendar year.

SARS. The grant of an SAR does not result in income for the grantee or in a
business deduction for the Company for federal income tax purposes. Upon the
exercise of an SAR, the grantee recognizes ordinary income and the Company is
entitled to a business deduction measured by the fair market value of the shares
of Common Stock plus any cash received. Income tax withholding would be required
for employees of the Company and its subsidiaries. The Board of Directors
believes that any income related to the exercise of SARs should be exempt from
the $1 million limit of Section 162(m) of the Code pursuant to the
performance-based compensation exception.

RESTRICTED STOCK GRANTS AND DEFERRED STOCK AWARD. If the shares of Common
Stock issued pursuant to a restricted stock grant or deferred stock award are
subject to restrictions resulting in a "substantial risk of forfeiture" pursuant
to the meaning of such term under Section

83 of the Code, the restricted stock grant or deferred stock award does not
result in income for the grantee or in a business deduction for the Company for
federal income tax purposes. If there are no such restrictions, conditions,
limitations or forfeiture provisions, the grantee recognizes ordinary income and
the Company is entitled to a business deduction upon receipt of the shares of
Common Stock. Dividends paid to the grantee while the stock remained subject to
any restrictions would be treated as compensation for federal income tax
purposes. At the time the restrictions lapse, the grantee receives ordinary
income and the Company is entitled to a business deduction, subject to the $1
million deduction limitation under Section 162(m), measured by the fair market
value of the shares of Common Stock at the time of lapse. Income tax withholding
would be required for employees of the Company and its subsidiaries.

OTHER STOCK BASED AWARDS. Any employee of the Company or any of its
subsidiaries who receives shares of Common Stock as bonus compensation or in
lieu of the employee's cash compensation shall recognize ordinary income, and
the Company shall be entitled to a business deduction, subject to the $1 million
deduction limitation under Section 162(m), measured by the fair market value of
the shares of Common Stock issued to the employee.

OTHER INFORMATION

If there is a stock split, stock dividend or other relevant change
affecting the Company's Common Stock, appropriate adjustments will be made in
the number of shares of Common Stock or in the type of securities to be issued
pursuant to any award granted before such event. In the event of a merger,
consolidation, combination or other similar transaction involving the Company in
which the Company is not the surviving entity, either all outstanding stock
options and SARs shall become exercisable immediately and all restricted stock
grants and deferred stock awards shall immediately become free of all
restrictions and conditions, or the Compensation Committee may arrange to have
the surviving entity grant replacement awards for all outstanding awards. Upon
termination of service prior to age 65 for any reason other than death or
disability, stock options and SARs which are exercisable as of the date of such
termination may be exercised within three months of the date of termination, and
any restricted stock grants and deferred stock awards which are still subject to
any restriction shall be forfeited to the Company. Upon death or disability or
voluntary or involuntary termination of service after age 65, all stock options
and SARs become immediately exercisable and may be exercised for a period of six
months (in the case of death or disability) or three months (in the case of
termination for reasons other than death or disability) after the date of
termination, and all restricted stock grants and deferred stock awards shall
become immediately free of all restrictions and conditions. The Compensation
Committee has the discretionary authority to alter or establish the terms and
conditions of an award in connection with the termination of service. The Board
of Directors may amend, suspend or terminate the 2000 Plan, subject to
shareholder approval if required by any applicable federal or state security
laws, tax laws or corporate statute.

NEW PLAN BENEFITS

As of March 28, 2003, no awards have been made under the 2000 Plan using
any of the additional shares that will be reserved for issuance under the 2000
Plan if the proposed amendment is approved by shareholders; however, the
non-employee directors of the Company

(Messrs. Brophy, Hill, Fessel and Smith) will be each entitled to a grant of
options to acquire 10,000 shares of Common Stock pursuant to the Formula Option
provisions of the 2000 Plan at a price equal to the fair market value of the
Common Stock on the date of the 2003 annual meeting if the amendment is
approved. Because other awards under the 2000 Plan are subject to the discretion
of the Compensation Committee, the number of shares which will be subject to
awards made under the 2000 Plan in fiscal year 2003 to the individuals or groups
of individuals listed below and the terms of such awards are not currently
determinable. The following table sets for the awards that were made during
fiscal 2002 under the 2000 Plan to:

o The Company's executive officers;

o All current executive officers of the Company, as a group;

o All current directors of the Company who are not executive officers,
as a group;

o All nominees for election as director; and

o All employees, including officers who are not executive officers, as a
group.

NUMBER OF
---------
SHARES (1) EXERCISE PRICE
---------- --------------

Anthony J. Caldarone,
Chairman and Chief Executive Officer....................... --- ---

John G. Yates,
President and nominee for election as director............. 90,000 $.155

Thomas C. Corley,
Senior Vice President, Treasurer and Chief Financial
Officer ................................................... 20,000 .155

Maria F. Caldarone,
Executive Vice President................................... 20,000 .155

Laura A. Camisa,.
Senior Vice President...................................... 20,000 .155

All current executive officers as a group (4 persons)........... 150,000 .155

All current directors who are not executive
officers as a group........................................ 40,000 .57

Mark N. Fessel, nominee for election as director................ 10,000 .57

All employees, including officers who are not executive
officers, as a group....................................... 5,000 .155

(1) Excludes shares subject to options granted in January 2002 for services
rendered in fiscal 2001 as follows: Mr. Caldarone - 75,000 shares; Mr.
Yates - 25,000 shares; Mr. Corley - 20,000 shares; Ms. Caldarone - 30,000
shares; Ms. Camisa - 30,000 shares; all executive officers as a group -
160,000 shares; and all employees, including officers who are not executive
officers as a group - 85,000 shares. Each of such options has an exercise
price of $.61 per share.

The closing price of the Company's Common Stock on the American Stock Exchange
was $0.11 per share on March 28, 2003.

VOTE REQUIRED

Approval and adoption by the Company's shareholders of the proposed
amendment to the 2000 Plan requires the affirmative vote of a majority of the
votes cast at the Annual Meeting by the holders of shares of Common Stock
present in person or represented by proxy.

The Board of Directors recommends a vote "FOR" the approval and adoption of
the amendment to the 2000 Plan.

ANNUAL REPORT

The annual report to shareholders for the fiscal year ended November 30,
2002 accompanies this Proxy Statement. Aidman, Piser & Company P.A. ("Aidman,
Piser") has audited the financial statements of the Company for the three fiscal
years ended November 30, 2002.

RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS

Selection of the independent public accountants for the Company is made by
the Board of Directors. Effective December 10, 2001, the Company's Board of
Directors approved the engagement of Aidman, Piser to serve as the Company's
independent public accountants for the fiscal 2001 audit, and dismissed
PricewaterhouseCoopers, LLP ("PricewaterhouseCoopers"), which had served as the
Company's auditors from 1988 through 2000. The Company's Board of Directors,
upon recommendation of its Audit Committee, approved the change in accountants.
Neither of the reports of PricewaterhouseCoopers on the financial statements of
the Company for the past two fiscal years contained an adverse opinion or
disclaimer of opinion, nor was either qualified or modified as to uncertainty,
audit scope, or accounting principle.

During the Company's fiscal years ended November 30, 1999 and 2000 and the
subsequent interim period through December 10, 2001, there were no disagreements
with PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statements disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers,
would have caused them to make reference to the subject matter of the
disagreements in their reports for such fiscal years.

During the Company's fiscal years ended November 30, 1999 and 2000 and the
subsequent interim period through December 10, 2001, the Company did not consult
with Aidman, Piser regarding either (i) the application of accounting principles
to a specific

transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements by Aidman, Piser that
was an important factor considered by the Company in reaching a decision as to
any accounting, auditing or financial reporting issue; or (ii) any matter that
was either the subject of a disagreement, as that term is used in Item
304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(v) of Regulation S-K.

As previously stated under the caption "Election of Directors," the
Company's Board of Directors has an Audit Committee consisting of outside
directors, and the present members of the committee are Mr. Brophy, Mr. Fessel
and Mr. Smith.

During fiscal 2002, and in connection with the audit of the Company's
fiscal 2002 financial statements, Aidman, Piser provided audit and non-audit
services to the Company as follows:

(a) AUDIT FEES: Aggregate fees billed by Aidman, Piser for professional
services rendered for the audit of the Company's fiscal year financial
statements for the fiscal year ended November 30, 2002 and for the
reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for that fiscal year were $58,384.

(b) FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: None.

The Audit Committee of the Board has considered whether provision of the
services described in sections (b) and (c) above is compatible with maintaining
the independent accountant's independence and, inasmuch as Aidman, Piser
provided no such services in fiscal 2002, determined that such services have not
adversely affected Aidman, Piser's independence.

A representative of Aidman, Piser will be present at the meeting and will
have an opportunity to make a statement if the representative desires to do so.
Said representative will also be available to respond to appropriate questions
from shareholders of the Company.

SHAREHOLDER PROPOSALS

Shareholder proposals for presentation at the Company's next annual meeting
must be received by the Company at its principal executive offices for inclusion
in its proxy statement and form of proxy relating to that meeting no later than
November 20, 2003. The Company's by-laws contain certain procedures that must be
followed in connection with shareholder proposals.

THE MANAGEMENT OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS AND FOR THE PROPOSAL TO AMEND THE 2000 PLAN
TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER.

THE COMPANY SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE UPON
WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF SHARES
OF COMMON STOCK OF THE COMPANY. REQUESTS SHOULD BE DIRECTED TO SHAREHOLDER
RELATIONS, CALTON, INC., 43 WEST FRONT STREET, SUITE 15, RED BANK, NEW JERSEY
07701.

ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND SEND IN THEIR PROXIES IN
THE ENCLOSED ENVELOPE WITHOUT DELAY TO STOCKTRANS, INC., 44 WEST LANCASTER
AVENUE, ARDMORE, PENNSYLVANIA 19003.

PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.

MARY H. MAGEE
SECRETARY

March 31, 2003

APPENDIX

CALTON, INC.
2000 EQUITY INCENTIVE PLAN

1. PURPOSE.
--------

The purpose of this Calton, Inc. 2000 Equity Incentive Plan (the "Plan") is
to advance the interests of Calton, Inc. (the "Company") and its
subsidiaries by enhancing the ability of the Company to (i) attract and
retain employees and other persons or entities who are in a position to
make significant contributions to the success of the Company and its
subsidiaries; (ii) reward such persons for such contributions; and (iii)
encourage such persons or entities to take into account the long-term
interest of the Company through ownership of shares of the Company's common
stock, $.01 par value per share (the "Common Stock").

The Plan is intended to accomplish these objectives by enabling the Company
to grant awards ("Awards") in the form of incentive stock options ("ISOs"),
nonqualified stock options ("Nonqualified Options") (ISOs and Nonqualified
Options shall be collectively referred to herein as "Options"), stock
appreciation rights ("SARs"), restricted stock ("Restricted Stock"),
deferred stock ("Deferred Stock"), or other stock based awards ("Other
Stock Based Awards"), all as more fully described below.

2. ADMINISTRATION.
---------------

The Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). The
Committee may be constituted to permit the Plan to comply with the "outside
director" requirement of Section 162(m)(4)(c)(i) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder, or any successor rules. The Committee will determine the
recipients of Awards, the times at which Awards will be made, the size and
type or types of Awards to be made to each recipient, and will set forth in
each such Award the terms, conditions and limitations applicable to the
Award granted. Awards may be made singly, in combination or in tandem. The
Committee will have full and exclusive power to interpret the Plan, to
adopt rules, regulations and guidelines relating to the Plan, to grant
waivers of Plan restrictions and to make all of the determinations
necessary for its administration. Such determinations and actions of the
Committee, and all other determinations and actions of the Committee made
or taken under authority granted by any provision of the Plan, will be
conclusive and binding on all parties.

3. EFFECTIVE DATE AND TERM OF PLAN.
--------------------------------

The Plan will become effective on January 27, 2000, but shall be subject to
approval by the requisite vote of the Company's shareholders. Any Awards
granted under the Plan prior to such shareholder approval shall be
conditioned upon such shareholder approval and shall be null and void if
such approval is not obtained.

The Plan will terminate on January 27, 2010, subject to earlier termination
of the Plan by the Board pursuant to Section 18 herein. No Award may be
granted under the Plan after the termination date of the Plan, but Awards
previously granted may extend beyond that date pursuant to the terms of
such Awards.

4. SHARES SUBJECT TO THE PLAN.
---------------------------

Subject to adjustment as provided in Section 16 herein, the aggregate
number of shares of Common Stock reserved for issuance pursuant to Awards
granted under the Plan shall be four million (4,000,000) shares. The
maximum number of shares of Common Stock which may be issued to the Chief
Executive Officer ("CEO") of the Company pursuant to all Awards granted the
CEO under the Plan shall not exceed thirty-five percent (35%) of the number
of shares of the Company's Common Stock reserved for issuance hereunder.
The maximum number of shares of the Company's Common Stock awarded to any
other "Participant" (as defined in Section 5 below) pursuant to all Awards
granted to such Participant under the Plan shall not exceed twenty percent
(20%) of the number of shares of the Company's Common Stock reserved for
issuance hereunder.

The shares of Common Stock delivered under the Plan may be either
authorized but unissued shares of Common Stock or shares of the Company's
Common Stock held by the Company as treasury shares, including shares of
Common Stock acquired by the Company in open market and private
transactions. No fractional shares of Common Stock will be delivered
pursuant to Awards granted under the Plan and the Committee shall determine
the manner in which fractional share value will be treated.

If any Award requiring exercise by a Participant for delivery of shares of
Common Stock is cancelled or terminates without having been exercised in
full, or if any Award payable in shares of Common Stock or cash is
satisfied in cash rather than Common Stock, the number of shares of Common
Stock as to which such Award was not exercised or for which cash was
substituted will be available for future Awards of Common Stock; provided,
however, that Common Stock subject to an Option cancelled upon the exercise
of an SAR shall not again be available for Awards under the Plan unless,
and to the extent that, the SAR is settled in cash. Shares of Restricted
Stock and Deferred Stock forfeited to the Company in accordance with the
Plan and the terms of the particular Award shall be available again for
Awards under the Plan unless the Committee determines otherwise.

5. ELIGIBILITY AND PARTICIPATION.
------------------------------

Those eligible to receive Awards under the Plan (each, a "Participant" and
collectively, the "Participants") will be persons in the employ of the
Company or any of its subsidiaries designated by the Committee
("Employees") and other persons or entities who, in the opinion of the
Committee, are in a position to make a significant contribution to the
success of the Company or its subsidiaries, including, without limitation,
consultants and agents of the Company or any subsidiary. A "subsidiary" for
purposes of the Plan will be a present or future corporation of which the
Company owns or controls,

or will own or control, more than 50% of the total combined voting power of
all classes of stock or other equity interests.

6. OPTIONS.
--------

(a) NATURE OF OPTIONS. An Option is an Award entitling the Participant to
purchase a specified number of shares of Common Stock at a specified
exercise price. Both ISOs, as defined in Section 422 of the Code, and
Nonqualified Options may be granted under the Plan; provided however,
that ISOs may be awarded only to Employees.

(b) EXERCISE PRICE. The exercise price of each Option shall be equal to
the "Fair Market Value" (as defined below) of the Common Stock on the
date the Award is granted to the Participant; provided, however, that
(i) in the Committee's discretion, the exercise price of a
Nonqualified Option may be less than the Fair Market Value of the
Common Stock on the date of grant; (ii) with respect to a Participant
who owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, the option price of an
ISO granted to such Participant shall not be less than one hundred and
ten percent (110%) of the Fair Market Value of the Common Stock on the
date the Award is granted; and (iii) with respect to any Option
repriced by the Committee, the exercise price shall be equal to the
Fair Market Value of the Common Stock on the date such Option is
repriced unless otherwise determined by the Committee. For purposes of
this Plan, Fair Market Value shall mean the average of the high and
low sales prices of the Common Stock as reported on the American Stock
Exchange, or if not reported on the American Stock Exchange, on the
principal securities exchange on which the Common Stock is listed, or
if not so listed, the high and low sales prices (or the average of the
high asked and low bid prices of the Common Stock if sales price
information is not reported) of the Common Stock as reported by the
Nasdaq Stock Market or, if not reported on the Nasdaq Stock Market, by
the NASD OTC Bulletin Board or similar quotation service. If the
Common Stock is not publicly traded, Fair Market Value shall be
determined in good faith by the Board of Directors.

(c) DURATION OF OPTIONS. The term of each Option granted to a Participant
pursuant to an Award shall be determined by the Committee; provided,
however, that in no case shall an Option be exercisable more than ten
(10) years (five (5) years in the case of an ISO granted to a
ten-percent stockholder as defined in (b) above) from the date of the
Award.

(d) EXERCISE OF OPTIONS AND CONDITIONS. Except as otherwise provided in
Sections 16 and 17 herein, and except as otherwise provided below with
respect to ISOs, Options granted pursuant to an Award will become
exercisable at such time or times, and on and subject to such
conditions, as the Committee may specify at the time of the Award. The
Options may be subject to such restrictions, conditions and forfeiture
provisions as the Committee may determine, including, but not limited
to, restrictions on transfer, continuous service with the Company or
any of

its subsidiaries, achievement of business objectives, and individual,
division and Company performance. To the extent exercisable, an Option
may be exercised either in whole at any time or in part from time to
time. With respect to an ISO granted to a Participant, the Fair Market
Value of the shares of Common Stock on the date of grant which are
exercisable for the first time by a Participant during any calendar
year shall not exceed $100,000.

(e) PAYMENT FOR AND DELIVERY OF STOCK. Full payment for shares of Common
Stock purchased will be made at the time of the exercise of the
Option, in whole or in part. Payment of the purchase price will be
made in cash or in such other form as the Committee may permit,
including, without limitation, delivery of shares of Common Stock.

7. STOCK APPRECIATION RIGHTS.
--------------------------

(a) NATURE OF STOCK APPRECIATION RIGHTS. A SAR is an Award entitling the
recipient to receive payment, in cash and/or shares of Common Stock,
determined in whole or in part by reference to appreciation in the
value of a share of Common Stock. A SAR entitles the recipient to
receive in cash and/or shares of Common Stock, with respect to each
SAR exercised, the excess of the Fair Market Value of a share of
Common Stock on the date of exercise over the Fair Market Value of a
share of Common Stock on the date the SAR was granted.

(b) GRANT OF SARS. SARs may be subject to Awards in tandem with, or
independently of, Options granted under the Plan. A SAR granted in
tandem with an Option which is not an ISO may be granted either at or
after the time the Option is granted. A SAR granted in tandem with an
ISO may be granted only at the time the ISO is granted and may expire
no later than the expiration of the underlying ISO.

(c) EXERCISE OF SARS. A SAR not granted in tandem with an Option will
become exercisable at such time or times, and on such conditions, as
the Committee may specify. A SAR granted in tandem with an Option will
be exercisable only at such times, and to the extent, that the related
option is exercisable. A SAR granted in tandem with an ISO may be
exercised only when the market price of the shares of Common Stock
subject to the ISO exceeds the exercise price of the ISO, and the SAR
may be for no more than one hundred percent (100%) of the difference
between the exercise price of the underlying ISO and the Fair Market
Value of the Common Stock subject to the underlying ISO at the time
the SAR is exercised. At the option of the Committee, upon exercise,
an SAR may be settled in cash, Common Stock or a combination of both.

8. RESTRICTED STOCK.
-----------------

A Restricted Stock Award entitles the recipient to acquire shares of Common
Stock, subject to certain restrictions or conditions, for no cash
consideration, if permitted by applicable law, or for such other
consideration as may be determined by the Committee.

The Award may be subject to such restrictions, conditions and forfeiture
provisions as the Committee may determine, including, but not limited to,
restrictions on transfer, continuous service with the Company or any of its
subsidiaries, achievement of business objectives, and individual, division
and Company performance. Subject to such restrictions, conditions and
forfeiture provisions as may be established by the Committee, any
Participant receiving an Award of Restricted Stock will have all the rights
of a stockholder of the Company with respect to the shares of Restricted
Stock, including the right to vote the shares and the right to receive any
dividends thereon.

9. DEFERRED STOCK.
---------------

A Deferred Stock Award entitles the recipient to receive shares of Common
Stock to be delivered in the future. Delivery of the shares of Common Stock
will take place at such time or times, and on such conditions, as the
Committee may specify. At the time any Deferred Stock Award is granted, the
Committee may provide that the Participant will receive an instrument
evidencing the Participant's right to future delivery of Deferred Stock.

10. DIRECTOR'S FEES.
----------------

Subject to the limitation contained in Section 4 of this Plan on the number
of shares of Common Stock which may be issued pursuant to this Plan, any
member of the Board who provides written notice to the Company shall be
entitled to receive all or a portion of the member's annual board retainer
fee, Board meeting fees, and Board committee fees in the form of shares of
the Company's Common Stock. Any member of the Board who desires to receive
all or any part of such Board fees in shares of Common Stock must provide
the Chief Financial Officer of the Company with written notice of the
member's election (an "Election") to receive payment of Board fees in this
form no later than five (5) business days prior to the date of payment of
such fees. Shares of Common Stock with an aggregate Fair Market Value, on
the date preceding the date of payment of Board fees, equal to the
aggregate amount of such Board fees shall be issued to the Board member no
later than fifteen (15) business days following the date of payment of such
Board fees by the Company.

11. FORMULA AWARDS.
---------------

On each date that (i) an individual who is not an employee of the Company
or any subsidiary is elected or reelected as a director by the shareholders
of the Company and (ii) that an annual meeting of shareholders of the
Company is held during the term of office of such director (but excluding
any annual meeting at which such director's term of office expires and such
director is not reelected) such director shall receive, on such date, a
grant of Nonqualified Stock options to acquire ten thousand (10,000) shares
of Common Stock and each such Option shall have a per share exercise price
equal to the Fair Market Value of the Common Stock on such date of grant.
Each Nonqualified Stock Option granted to a non-employee Director pursuant
to this Section 11 shall have a term of five (5) years from the date of
grant and shall vest and become fully exercisable on the first anniversary
of such date of grant. In order for a non-employee Director to be

granted such Nonqualified Stock options, the Director must have attended
seventy-five (75%) of all Board meetings and seventy-five percent (75%) of
all Board committee meetings, of which the Director is a member, called and
held during the previous twelve (12) months while such Director was a
member of the Board and committees). Notwithstanding anything to the
contrary set forth above, no awards of Nonqualified Stock Options shall be
made pursuant to this Section 11 to a Director who is receiving a
comparable award under the Company's 1996 Equity Incentive Plan. The
provisions of this Section 11 of the Plan shall not be amended more than
once every six (6) months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, or the rules thereunder.

12. OTHER STOCK BASED AWARDS.
-------------------------

The Committee shall have the right to grant Other Stock Based Awards under
the Plan to Employees which may include, without limitation, the grant of
shares of Common Stock as bonus compensation and the issuance of shares of
Common Stock in lieu of an Employee's cash compensation.

13. AWARD AGREEMENTS.
-----------------

The grant of any Award under the Plan may be evidenced by an agreement
which shall describe the specific Award granted and the terms and
conditions of the Award. Any Award shall be subject to the terms and
conditions of any such agreement required by the Committee.

14. TRANSFERS.
----------

No Award (other than an outright Award in the form of Common Stock without
any restrictions) may be assigned, pledged or transferred other than by
will or by the laws of descent and distribution and, during a Participant's
lifetime, will be exercisable only by the Participant or, in the event of a
Participant's incapacity, by the Participant's guardian or legal
representative.

15. RIGHTS OF A STOCKHOLDER.
------------------------

Except as specifically provided by the Plan, the receipt of an Award will
not give a Participant rights as a stockholder of the Company. The
Participant will obtain such rights, subject to any limitations imposed by
the Plan, or the instrument evidencing the Award, upon actual receipt of
shares of Common Stock.

16. CONDITIONS ON DELIVERY OF STOCK.
--------------------------------

The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove any restrictions or legends from shares
of Common Stock previously delivered under the Plan until, (a) in the
opinion of the Company's counsel, all applicable federal and state laws and
regulations have been complied with, (b) until the shares of Common Stock
to be delivered have been listed or authorized to be listed on the American
Stock Exchange (or such other exchange or quotation system on which shares

of Common Stock may be listed or quoted), and (c) until all other legal
matters in connection with the issuance and delivery of such shares of
Common Stock have been approved by the Company's counsel. If the sale of
shares of Common Stock has not been registered under the Securities Act of
1933, as amended (the "Act"), and qualified under the appropriate "blue
sky" laws, the Company may require, as a condition to exercise of the
Award, such representations and agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and laws and may
require that the certificates evidencing such shares of Common Stock bear
an appropriate legend restricting transfer.

If an Award is exercised by a Participant's legal representative, the
Company will be under no obligation to deliver shares of Common Stock
pursuant to such exercise until the Company is satisfied as to the
authority of such representative.

17. TAX WITHHOLDING.
----------------

The Company will have the right to deduct from any cash payment under the
Plan taxes that are required to be withheld and to condition the obligation
to deliver or vest shares of Common Stock under this Plan upon the
Participant's paying the Company such amount as the Company may request to
satisfy any liability for applicable withholding taxes. The Committee may
in its discretion permit Participants to satisfy all or part of their
withholding liability either by delivery of shares of Common Stock held by
the Participant or by withholding shares of Common Stock to be delivered to
a Participant upon the grant or exercise of an Award.

18. ADJUSTMENT OF AWARD.
--------------------

(a) In the event that a dividend shall be declared upon the Common Stock
payable in shares of Common Stock, the number of shares of the Common
Stock then subject to any Award and the number of shares of the Common
Stock which may be issued under the Plan but not yet covered by an
Award shall be adjusted by adding to each share the number of shares
which would be distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend. In the event that the
outstanding shares of the Common Stock shall be changed into or
exchanged for a different number or kind of shares of Common Stock or
other securities of the Company or of another corporation or for cash,
whether through reorganization, recapitalization, stock split,
combination of shares, sale of assets, merger or consolidation in
which the Company is the surviving corporation, then, there shall be
substituted for each share of the Common Stock then subject to any
Award, the number and kind of shares of stock or other securities or
the amount of cash into which each outstanding share of the Common
Stock shall be so changed or for which each such share shall be
exchanged.

(b) In the event of a proposal, which is approved by the Board, of any
merger or consolidation involving the Company where the Company is not
the surviving entity, any sale of substantially all of the Company's
assets or any other

transaction or series of related transactions as a result of which a
single person or several persons acting in concert own a majority of
the Company's then outstanding Common Stock (such merger,
consolidation, sale of assets, or other transaction being hereinafter
referred to as a "Transaction"), all outstanding options and SARs
shall become exercisable immediately before or contemporaneously with
the consummation of such Transaction and each outstanding share of
Restricted Stock and each outstanding Deferred Stock Award shall
immediately become free of all restrictions and conditions upon
consummation of such Transaction. Immediately following the
consummation of the Transaction, all outstanding Options and SARs
shall terminate and cease to be exercisable.

In lieu of the foregoing, if the Company will not be the surviving
corporation or entity, the Committee may arrange to have such
acquiring or surviving corporation or entity, or an "Affiliate,, (as
defined below) thereof, grant replacement Awards which shall be
immediately exercisable to Participants holding outstanding Awards.

The term "Affiliate," with respect to any Person, shall mean any other
Person who is, or would be deemed to be an "affiliate" or an
"associate" of such Person within the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934. The term "Person" shall mean a
corporation, association, partnership, joint venture, trust,
organization, business, individual or government or any governmental
agency or political subdivision thereof.

(c) In the event of the dissolution or liquidation of the Company (except
a dissolution or liquidation relating to a sale of assets or other
reorganization of the Company referred to in the preceding sections),
the outstanding options and SARs shall terminate as of a date fixed by
the Committee; provided, however, that not less than thirty (30) days
written notice of the date so fixed shall be given to each Participant
who shall have the right during such period to exercise the
Participant's Options or SARs as to all or any part of the shares of
Common Stock covered thereby. Further, in the event of the dissolution
or liquidation of the Company, each outstanding share of Restricted
Stock and each outstanding Deferred Stock Award shall immediately
become free of all restrictions and conditions.

19. TERMINATION OF SERVICE.
-----------------------

Upon a Participant's termination of service with the Company or a
subsidiary (if an employee only of a subsidiary), any outstanding Award
shall be subject to the terms and conditions set forth below, unless
otherwise determined by the Committee:

(a) In the event a Participant leaves the employ or service of the Company
or a subsidiary of the Company, prior to the Participant's 65th
birthday, whether voluntarily or otherwise but other than by reason of
the Participant's death or

"disability" (as such term is defined in Section 22(e)(3) of the
Code), each Option and SAR granted to the Participant shall terminate
upon the earlier to occur of (i) the expiration of the period three
(3) months after the date of such termination and (ii) the date
specified in the Option or SAR; provided, that, prior to the
termination of such Option or SAR, the Participant shall be able to
exercise any part of the Option or SAR which is exercisable as of the
date of termination. Further, each outstanding share of Restricted
Stock and each outstanding Deferred Stock Award which remains subject
to any restrictions or conditions of the Award shall be forfeited to
the Company upon such date of termination.

(b) In the event a Participant's employment with or service to the Company
or its subsidiaries terminates by reason of the Participant's death or
"disability" (as such term is defined in Section 22(e)(3) of the
Code), each Option and SAR granted to the Participant shall become
immediately exercisable in full and shall terminate upon the earlier
to occur of (i) the expiration of the period six (6) months after the
date of such termination and (ii) the date specified in the option or
SAR. Further, each outstanding share of Restricted Stock and each
outstanding Deferred Stock Award shall immediately become free of all
restrictions and conditions upon the date of such termination.

(c) In the event a Participant voluntarily or involuntarily leaves the
employ or service of the Company or a subsidiary of the Company, after
the Participant's 65th birthday, each Option and SAR granted to the
Participant shall become immediately exercisable in full and shall
terminate upon the earlier to occur of (i) the expiration of three (3)
months after the date of such termination and (ii) the date specified
in the Option or SAR. Further, each outstanding share of Restricted
Stock and each outstanding Deferred Stock Award shall immediately
become free of all restrictions and conditions upon the date of such
termination.

20. AMENDMENTS AND TERMINATION.
---------------------------

The Committee will have the authority to make such amendments to any terms
and conditions applicable to outstanding Awards as are consistent with this
Plan; provided, that, except for adjustments under Section 16 hereof, no
such action will modify such Award in a manner adverse to the Participant
without the Participant's consent except as such modification is provided
for or contemplated in the terms of the Award.

The Board may amend, suspend or terminate the Plan, subject to shareholder
approval if so required by any applicable federal or state securities laws,
tax laws or corporate statute, except that no action may, without the
consent of a Participant, adversely affect any Award previously granted to
the Participant under the Plan.

21. SUCCESSORS AND ASSIGNS.
-----------------------

The provisions of this Plan shall be binding upon all successors and
assigns of any such Participant including, without limitation, the estate
of any such Participant and the

executors, administrators, or trustees of such estate, and any receiver,
trustee in bankruptcy or representative of the creditors of any such
Participant.

22. MISCELLANEOUS.
--------------

(a) This Plan shall be governed by and construed in accordance with the
laws of the State of New Jersey.

(b) Any and all funds received by the Company under the Plan may be used
for any corporate purpose.

(c) Nothing contained in the Plan or any Award granted under the Plan
shall confer upon a Participant any right to be continued in the
employment of the Company or any subsidiary, or interfere in any way
with the right of the Company, or its subsidiaries, to terminate the
employment relationship at any time.

CALTON, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 21, 2003

THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF CALTON, INC.

P KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes
and appoints Anthony J. Caldarone and Laura A. Camisa and each of them,
the true and lawful attorneys, agents and proxies of the undersigned, with
R full power of substitution, to vote with respect to all the shares of
Common Stock of CALTON, INC., standing in the name of the undersigned at
the close of business on March 28, 2003, at the annual meeting of
O shareholders to be held at 2013 Indian River Boulevard, Vero Beach,
Florida on May 21, 2003 and at any and all adjournments thereof, with all
powers that the undersigned would possess if personally present and
X especially (but without limiting the general authorization and power
hereby given) to vote as indicated on the reverse side hereof. Said
proxies are authorized to vote in their discretion upon any other matters
Y which may come before the meeting.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED,
AND IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED, WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE OF THIS CARD AND
FOR THE PROPOSAL TO AMEND THE 2000 EQUITY INCENTIVE PLAN.

COMMON STOCK

(This proxy is continued from reverse side)

Please mark your |X|
votes as in this example.

FOR all nominees WITHHOLD
(except as AUTHORITY to
provided to the vote for all
contrary below) nominees
FOR AGAINST ABSTAIN
1. Election of Mark N. |_| |_| 2. Approval of |_| |_| |_|
Fessel and John G. Amendment to
Yates as Directors. 2000 Equity
Incentive Plan

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE NOMINEE(S) NAME HERE:

- -----------------------------------------------------

PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSING
ENVELOPE.

Signature(s) of Shareholder(s)______________________________________________________________________________________________________
(Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on this card. When signing as attorney, trustee,
executor, administrator, guardian or corporate officer, please give your FULL title.)